Interest Rates v Credit score v Deposit

sso3es

Seen some 5 year fixed deals which seem to give me what I want based on a 40% LTV scenario. My question is, how likely are you to be eligible for these deals with regards to your credit score.

I have an impeccible credit history but I also fear it's not a fully desireable credit score because I have never had a credit card and things like that. So while it's all well and good having 40% deposit, I wondered whether having the deposit and a decent credit history was enough to achieve these 5 year fixed rates - at around 2.4% or are these sort of rates only achieveable for people with 40% deposit on top of their amazing salaries and very good credit scores?

Cheers

kingstreet

Assuming you're talking about a 40% deposit and a 60% loan to value, you'll be fine. Credit score isn't particularly important at that level, as long as you have no adverse credit, you should be fine.

TBH risk is everything and at 60% the lender would consider the case low-risk.

lee111s

Salary has no relevance on the rate as far as i know, it merely dictates how much you can borrow. The fact you have a 40% deposit puts you in good stead, even if you didn't have a brilliant credit score you'd still have a good chance of getting a decent rate. Go and see a broker, they'll be able to work out the best deal for you.

sso3es

Thanks guys - that's really encouraging to hear.

If you care to help further, what are the pitfalls of these 5 year deals- do you have to be weary of the interest hikes at the end of the 5 year perioid? The offer I have seen is £1500 fee which I see as acceptable - having that 5 year security would make me much happier to stretch myself a little bit further than I would have ordinarily.

Thanks again

lee111s

It's totally up to you, your circumstances and how comfortable you are. Some people prefer a fix, some a tracker. A broker will be able to work out how much each will cost and you can make your decision based on that

Thrugelmir

The product fee needs to be taken into account when comparing mortgage products. So while the headline interest rate appears low. The amount you are borrowing is proportionately impacted by the product fee. Lenders are fishing for low LTV , high mortgage customers when they set a combination of low rates and high product fees.

kingstreet

sso3es wrote: »

If you care to help further, what are the pitfalls of these 5 year deals- do you have to be weary of the interest hikes at the end of the 5 year perioid? The offer I have seen is £1500 fee which I see as acceptable - having that 5 year security would make me much happier to stretch myself a little bit further than I would have ordinarily

I don't think you should feel tired, but if you mean wary, you should be wary of the end of any mortgage product.

What is the "follow-on" rate, what is your lender's history on standard variable rate, if that's the follow-on and what is its history on customer retention products?

No-one can possibly tell you the outlook for rates in five years' time, so you're going to have to make your own "best guess" and choose what appears to be the most suitable product for you now and in a few years' time, based on what you think is going to happen to you, during that period.